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TELSTRA
ANNUAL
REPORT
2013

Table of contents

  • Page 1
    TELSTRA ANNUAL REPORT 2013

  • Page 2
    ... and value and latest closing share price. Payment & Tax - dividend payment history, payment instructions and TFN details. You can update your bank details here. Communication - become an e-Shareholder and update postal/email addresses and communication elections here. Annual Report Telstra's 2013...

  • Page 3
    ... shareholders will find more helpful and easy to use. The sections of our Annual Report Our Business, Chairman and CEO Message, Strategy and Performance and Full Year Results and Operations Review comprise our operating and financial review (OFR) and form part of the Directors' Report. Telstra...

  • Page 4
    ...2 Telstra Annual Report 2013 SALES REVENUE NET PROFIT IN DIVIDENDS NEW DOMESTIC RETAIL MOBILE CUSTOMERS NEW RETAIL FIXED BROADBAND CUSTOMERS INVESTED IN THE WIRELESS NETWORK (EX SPECTRUM) INVESTED IN SPECTRUM LICENCE RENEWALS COMMITTED TO ACQUIRE NEW MOBILE SPECTRUM LICENCES ONLINE CUSTOMER...

  • Page 5
    ... Kong mobile operator CSL New World, Telstra Global's networks and managed services business and Telstra's China-based search and advertising businesses. We understand our customers want technology and content solutions that are simple and easy to use - that's why we've built networks like Australia...

  • Page 6
    ... of our customers now GROWTH IN CUSTOMER NUMBERS doing business with us online. Telstra's products and ongoing investment in the network continue to attract new Ykijec[hi$?dWZZ_j_edjej^['$)c_bb_ed domestic retail mobile customers added during the year, we added: 4 Telstra Annual Report 2013

  • Page 7
    CHAIRMAN AND CEO MESSAGE BUILDING NEW GROWTH BUSINESSES key areas - employee involvement, digital inclusion and environmental leadership. 7iijWj[ZWXel["j^[D7Ifehj\eb_eYedj_dk[Z Our people contributed more than 4,200 to grow, with revenue increasing by employee volunteer days, a 200 per ...

  • Page 8
    ... can say 'Thanks'. CUSTOMER SERVICE INITIATIVES We've made further progress in keeping our customers informed about their mobile usage by increasing the number of usage alerts we send them. These alerts help our customers better manage their mobile spend and avoid 'bill 6 Telstra Annual Report 2013

  • Page 9
    ... centres by an Australia-wide team of technicians, allowing our customers to place greater reliance on network applications and do business in more places. RETAIL PRODUCT CUSTOMER GROWTH IN FY13 MOBILES DOMESTIC FIXED BROADBAND HK MOBILES (CSL) CLOUD 9% 7% 12% 68% Telstra Annual Report 2013...

  • Page 10
    ... the business to support growth in our customer base, customer service initiatives and the development of new growth businesses. We have introduced a range of initiatives and improved feedback channels between our frontline staff and senior management during the year that helped us improve processes...

  • Page 11
    ... growth in our core business, we must also develop new businesses to ensure long term growth. Our current strategy includes three key growth opportunities - Network Applications and Services (NAS), International and Media. We also have a corporate venture capital group, Telstra Ventures that invests...

  • Page 12
    ... to change, we will continue to review all aspects of its operations, to make sure we have the right resources in the right areas, so we can meet our customers' needs. Additional information on our future outlook can be found in the Chairman and CEO Message on page 4. 10 Telstra Annual Report 2013

  • Page 13
    ... working to develop and deliver new and innovative technologies and products to meet changing consumer needs; and improving our service offerings to align with customer expectations about pricing, scalability, privacy, security, performance and support. Sensis' changing business model can be found...

  • Page 14
    ... declined by 2.0 per cent. With our growing customer base and increased handset sales, directly variable costs (DVCs) or goods and services purchased increased by 3.4 per cent 12 Telstra Annual Report 2013 to $6,389 million. Network payments expense continued to decline. Other expenses increased by...

  • Page 15
    ... YEAR RESULTS AND OPERATIONS REVIEW PRODUCT SALES REVENUE BREAKDOWN Other 2% International businesses 7% GRO WT H Fixed voice 17% ED FIX Media 9% Fixed broadband 8% NAS 6% Other fixed 3% Data & IP 12% Mobile 36% M O BI LE KEY PRODUCT REVENUE FY13 $m Fixed Mobile Data & IP NAS International...

  • Page 16
    ... domestic retail mobile customers added during the year, taking our total mobile customer base to 15.1 million. Customers are using more data on our wireless network; their experience being enhanced by our continued investments in the network, product development and customer service. To continue...

  • Page 17
    ...CSL New World) business, the Telstra Global business and our China digital media businesses providing services in automotive, IT and consumer electronics. CSL New World revenue grew by 17.6 per cent to $1,011 million with 425,000 new customers added during the year. In Hong Kong dollar terms CSL New...

  • Page 18
    ... double-digit growth in NAS and IP access and data. NAS revenue grew by 26.4 per cent to $278 million and IP access and data revenue grew by 13.2 per cent to $219 million. Mobile services revenue (including 16 Telstra Annual Report 2013 Telstra Wholesale Income generated from our Wholesale business...

  • Page 19
    ... Hutchison Australia and subsequent closure of the network in the Telstra Annual Report 2013 17 Other Our Other category consists primarily of our corporate centre functions where we recognise payments received under NBN agreements, impairments, adjustments to our employee provisions for bond rate...

  • Page 20
    .... This included increased working capital to support business growth, cash proceeds from the sale of TelstraClear of $669 million and spectrum licence payments of $821 million. Excluding the cash proceeds from sale of TelstraClear and spectrum licence payments, on a full year basis, \h[[YWi^Ã"em...

  • Page 21
    FULL YEAR RESULTS AND OPERATIONS REVIEW FINANCIAL SETTINGS FY13 Actual Debt servicing(i) Gearing (ii) Interest cover(iii) FY13 Target Zone 1.5 - 1.9x 50% to 70% >7x SUMMARY STATEMENT OF FINANCIAL POSITION FY13 $m Current assets Non current assets Total assets Current liabilities Non current ...

  • Page 22
    ... can use our core telecommunications capabilities, assets, expertise, workforce and national presence to make a genuine contribution to the communities in which we operate. To do this, we work with our customers and suppliers, engage our employees and develop partnerships with government and non-pro...

  • Page 23
    ... or location. Our Everyone Connected programs focus on making our products and services more accessible, enhancing digital literacy and cyber safety, and supporting technological innovation for social good. Environmental leadership We need to be more proactive and strategic in our approach to the...

  • Page 24
    ...h[fehj_d]$ As a member of the Global Compact Network Australia, we participated in leadership groups for environment, business and human rights, and anticorruption this year. SUPPORTED WORKFORCE Telstra partners with local nonprofit groups to create employment opportunities for people with...

  • Page 25
    ... a new program providing $1 million worth of pre-paid mobile phone recharge cards for customers in crisis to stay in touch. We also revised our Financial Hardship Policy to cover events including sudden illness or loss of employment that may impact customers' ability to pay their bills. PRIVACY...

  • Page 26
    ... LTIFR is the reported number of accepted workers' compensation claims for work-related injury or disease that incur lost time for each million hours worked. This data relates to Telstra Corporation Limited only and does not include subsidiary companies, such as Sensis. 24 Telstra Annual Report 2013

  • Page 27
    ...per cent of this year's graduate intake. We have made good progress in addressing the gender pay equity gap and continue to focus on a range of initiatives including gender pay audits, closely monitoring female new starter fWYaW][i"fhecej_edhWj[iWdZÃ"[n_Xb[ working across Telstra. We will start...

  • Page 28
    ...use innovative tablet technology to deliver health services and support to 30 Indigenous MJD clients and their carers across six Arnhem Land communities. DIGITAL LITERACY We established a partnership with the New South Wales Government to deliver the Tech Savvy Seniors program. The 18 month program...

  • Page 29
    ... residential and small business customers. In FY13, Telstra provided assistance following eight natural disasters across the country. We further improved the Emergency Alert System (EA), creating a service that accurately sends emergency warning messages to the public based on their geographical...

  • Page 30
    ...bef[ZW framework for an enterprise-wide environmental strategy, which will focus on three key areas - improving the energy efficiency of our operations, reducing environmental impact in our supply chain and developing greener products and services. We will finalise the strategy and Yecc[dY[_cfb...

  • Page 31
    ... end-of-life network equipment and batteries. There was a significant increase in the amount of e-waste collected due to the number of batteries replaced at Telstra's exchanges. We also assist our customers to deal more effectively with e-waste. In FY13 we collected 14 tonnes of mobile phones and...

  • Page 32
    ... as Group Managing Director Telstra Enterprise and Government where he was responsible for the company's corporate, government and large business customers in Australia, TelstraClear in New Zealand and Telstra's International sales division. Before joining Telstra, Mr Thodey was Chief Executive Of...

  • Page 33
    ... has over 20 years experience in senior executive roles in Australia and overseas, including in global publishing and the transition of traditional business models to adapt and thrive in a digital environment as well as sales and marketing. Most recently she was the Managing Director of Random House...

  • Page 34
    .... ANDREW PENN CHIEF FINANCIAL OFFICER, FINANCE AND STRATEGY Telstra International Group is responsible for Telstra's international assets and connectivity, including Hong Kong's leading mobile operator CSL, Telstra Global's networks and managed services business and Telstra's China-based search and...

  • Page 35
    ... and experience, together with details of the year of initial appointment and re-election (where applicable), can be found in the Board of Directors section of this Annual Report. John Stocker retired as a non-executive Director at the conclusion of our 2012 Annual General Meeting (held...

  • Page 36
    ... our financial, strategic, operational and risk management policies and processes, our governance framework (including key policies), culture and values and key developments in our Company and the sectors and environments in which we operate. We also have in place a continuing education program for...

  • Page 37
    ... in relation to the senior executives. The results of the CEO's annual performance and review of the senior executives are then approved by the Board. Details regarding performance evaluations for the CEO and senior executives are set out in our Remuneration Report (which forms part of our Directors...

  • Page 38
    ... of the Board, CEO and Company Secretary • performance and remuneration of senior management • remuneration strategies, practices and disclosures generally • work health and safety • diversity (excluding Board diversity) • employee equity plans, and • management succession, capability...

  • Page 39
    ... and, at its date of cessation, membership comprised John Zeglis (Chairman), Catherine Livingstone and Steven Vamos. BOARD AND COMMITTEE MEETING ATTENDANCE Details regarding the number of meetings held by the Board and its Committees during FY13, and attendance by Board members, are set out below...

  • Page 40
    ... management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. PROMOTING RESPONSIBLE AND ETHICAL BEHAVIOUR Our Telstra Values, Telstra Group Code of Conduct & Business Principles (Code of Conduct) and company policies...

  • Page 41
    ... governance section of our website. OUR REMUNERATION FRAMEWORK Information relating to our remuneration framework and policies can be found in our Remuneration Report (which forms part of our Directors' Report). Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 42
    ... staff in Telstra International Philippines, Inc (which was incorporated in April 2013) and Chief Entertainment Pty Ltd as they did not participate in our 2013 Employee Engagement Survey. Full time and part time staff in Telstra Corporation Limited and its wholly owned subsidiaries, excluding casual...

  • Page 43
    ... May 2013, is provided in the corporate governance section of our website at www.telstra.com.au/abouttelstra/company-overview/ governance/diversity-and-inclusion/index.htm. • Flexibility: we began a series of pilot projects on job sharing, employee connection during and after long term leave such...

  • Page 44
    ... in Telstra's operations and the expected results of those operations in future financial years (see Our Business, Chairman and CEO Message, Strategy and Performance and Full Year Results and Operations Review on pages 3 to 19 of the Annual Report accompanying this Directors' Report). Information in...

  • Page 45
    ...the number of Board and Committee meetings and attendance by Directors at these meetings is provided in the Corporate Governance Statement on page 37 of the Annual Report accompanying this report; and • details of Director and senior executive remuneration are set out in the Remuneration Report on...

  • Page 46
    ... or executive officer was also an employee of Telstra or a director or employee of a wholly owned controlled entity of Telstra (other than Telstra Directors); and • the officers listed above (other than Telstra Directors) and certain employees of Telstra or a related body corporate of Telstra who...

  • Page 47
    ... and non-audit services provided during the year are detailed in note 8 to the financial statements. The Directors are satisfied that the provision of non-audit services during financial year 2013 is consistent with the general standard of independence for auditors imposed by the Corporations Act...

  • Page 48
    ... of payments to the previous year. Details the LTI outcomes for plans with a test point at 30 June 2013. Lists the key contract terms governing the employment of Senior Executives (including termination entitlements where relevant). 54 54 3.3 3.4 55 56 4. Non-executive Director Remuneration...

  • Page 49
    ...year performance period. These shares are subject to a further Restriction Period ending August 2014. Effective 1 July 2012, Board fees for the Chairman and non-executive Directors were increased by 3.7%. There was no increase in Committee fees. At the 2012 Annual General Meeting (AGM), shareholders...

  • Page 50
    ...Chief Executive Officer Chief Customer Officer GMD Telstra Media GMD Telstra Wholesale GMD Telstra Innovation, Products and Marketing GMD Business Support and Improvement Chief Financial Officer Chief Operations Officer 1.4 Actual Pay and Benefits Crystallised in FY13 for Senior Executives Employed...

  • Page 51
    ... relevant factors, while the CEO undertakes a similar exercise in relation to Senior Executives. The results of the CEO's annual review of Senior Executives performance and remuneration are approved by the Board. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 49

  • Page 52
    ... our business strategy over the longer term and increasing shareholder value. Engagement With Consultants External consultants are required to engage directly with the Remuneration Committee Chairman as the first point of contact whenever market data for Senior Executive positions is scoped...

  • Page 53
    ... link between achieving the outcomes of Telstra's business strategy and increasing shareholder value. In relation to these performance measures: • the financial measures were set in accordance with our FY13 financial plan and strategy; • we replaced Customer Satisfaction with NPS as the customer...

  • Page 54
    REMUNERATION REPORT Relative Total Shareholder Return RTSR measures the performance of an ordinary Telstra share (including the value of any cash dividends and other shareholder benefits paid during the period) relative to the other companies in the comparator group over the same period. The Board ...

  • Page 55
    ... in calculating their shareholding for the purposes of this policy. Senior Executives must obtain Board approval before they sell shares if they have not yet met their share ownership requirements under the policy. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 53

  • Page 56
    ... to 30 June 2013 for Consumer and Business, and the six month consolidated result from 1 January 2013 to 30 June 2013 for Enterprise and Government. The final result was audited by Telstra's Group Internal Audit team. In respect of determining the Wholesale Customer Satisfaction measure that applies...

  • Page 57
    ... a Restriction Period (concluding August 2014), during which Senior Executives are not permitted to trade or sell those shares. -2.3% -3% 0% FY09 FY10 FY11 FY12 FY13 3.3.2 FY11 Chief Customer Officer LTI Plan Testing as at 30 June 2013 As disclosed in our 2011 Remuneration Report and noted...

  • Page 58
    REMUNERATION REPORT 3.4 Senior Executive Contract Details The key terms and conditions of service contracts for current Senior Executives are summarised in the table below. Upon notice being given, Telstra can require a Senior Executive to work through the notice period or may terminate employment ...

  • Page 59
    ...the interests of our shareholders, the Board has established guidelines to encourage non-executive Directors to hold Telstra shares equivalent to at least 50 per cent of their annual fees. Such shares are to be acquired over a five year period from the later of 1 July 2009 or the date of appointment...

  • Page 60
    ... Accounting Standards. The figures provided under the REMUNERATION REPORT Telstra Annual Report 2013 Equity Settled Share-based Payments columns are based on accounting values and do not reflect actual payments received by KMP in FY13. Short Term Employee Benefits Accounting Value (at risk...

  • Page 61
    ... the year that failed to satisfy non-market (i.e. non-RTSR) performance targets. Refer to footnote (8) and Table 5.4 for further information. Telstra Corporation Limited and controlled entities (7) This includes the value of Deferred Shares allocated under the FY12 and FY13 STI plans whereby...

  • Page 62
    ... equal parts over one and two years on the anniversary of their allocation date, subject to the Senior Executive's continued employment. Refer to note 27 of the financial statements for further details. (2) (3) (4) 60 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 63
    ... of the financial statements. Gordon Ballantyne did not participate in any LTI for FY13 due to the fixed term nature (four years) of his initial employment contract. He participated in a cash based LTI beginning 7 March 2011 (details of which are included in Telstra's 2011 Remuneration Report). The...

  • Page 64
    ...Remuneration is the sum of short term employee benefits, post employment benefits, termination benefits, other long term benefits and equity settled share based payments as detailed in Table 5.1 of this Report. (2) (3) (4) 62 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 65
    .... (8) As part of his Service Agreement negotiated upon appointment, the Chief Financial Officer was allocated 96,500 Performance Shares in FY12. Refer to note 27 to the financial statements for further details. Telstra Annual Report 2013 (*) Table contains equity instruments awarded as part of...

  • Page 66
    ... plan was 22 October 2012. The fair value of the RTSR and FCF ROI Performance Rights granted in FY13 at the grant date is $2.14 and $3.28 respectively. The fair value reflects the valuation approach required by AASB 2 using an option pricing model, as explained in note 27 to the financial statements...

  • Page 67
    .... These payments refer to the value of car parking, as well as telecommunications and other services and equipment provided to non-executive Directors to assist them in performing their duties. From time to time Telstra may also make products and services available to non-executive Directors without...

  • Page 68
    ... August 2012. However, the allocation of Deferred Shares under the FY13 STI Plan will be made subsequent to the reporting date of 30 June 2013, therefore they have not been included in the table above. For these non-executive Directors and Senior Executives who left Telstra/the Board during the year...

  • Page 69
    ... Cashflow from operating and investing activities Group Managing Director Key Management Personnel Long Term Incentive National Broadband Network Agreements with NBN Co and the Government in relation to Telstra's participation in the rollout of the NBN Net Promoter Score. A non financial measure in...

  • Page 70
    ...applicable code of professional conduct. Ernst & Young Catherine B Livingstone AO Chairman 8 August 2013 David I Thodey Chief Executive Officer and Executive Director 8 August 2013 SJ Ferguson Partner Sydney, Australia 8 August 2013 A member firm of Ernst & Young Global Limited Liability limited...

  • Page 71
    ... TELSTRA CORPORATION LIMITED AND CONTROLLED ENTITIES Australian Business Number (ABN): 33 051 775 556 FINANCIAL REPORT as at 30 June 2013 Financial Statements Income Statement ...Statement of Comprehensive Income Statement of Financial Position ...Statement of Cash Flows...Statement of Changes...

  • Page 72
    ...EBIT) ...Finance income ...6 Finance costs...7 Net finance costs ...Profit before income tax expense ...Income tax expense ...9 Profit for the year ...Attributable to Equity holders of Telstra Entity ...Non-controlling interests ... 3,813 52 3,865 3,405 19 3,424 Earnings per share (cents per share...

  • Page 73
    ...Telstra Group Year ended 30 June 2013 2012 $m $m Profit for the year Attributable to equity holders of Telstra Entity ...Attributable to non-controlling interests...Items that will not be reclassified subsequently to the income statement Retained profits: - actuarial gain/(loss) on defined benefit...

  • Page 74
    STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013 Telstra Group As at 30 June 2013 2012 $m $m Note Current assets Cash and cash equivalents...Trade and other receivables ...Inventories ...Derivative financial assets ...Current tax receivables...Prepayments ...Assets classified as held for sale ...

  • Page 75
    ... 30 JUNE 2013 FINANCIAL STATEMENTS Note Telstra Group Year ended 30 June 2013 2012 $m $m Cash flows from operating activities Receipts from customers (inclusive of goods and services tax (GST)) Payments to suppliers and to employees (inclusive of GST) ...Government grants received ...Net cash...

  • Page 76
    ... represented our share of the fair value adjustments to TelstraClear Limited net assets upon acquisition of a controlling interest, which was amortised over the useful life of the underlying revalued assets. The reserve balance was amortised in full in financial year 2012. (d) The general reserve...

  • Page 77
    ...company's operating performance before financing, income tax and non-cash capital related expenses. In addition, we believe EBITDA is useful to investors because analysts and other members of the investment community largely view EBITDA as a key and widely recognised measure of operating performance...

  • Page 78
    ... income and statement of financial position. We account for the acquisition of our controlled entities using the acquisition method of accounting. This involves recognising the acquiree's identifiable assets, liabilities and contingent liabilities at their fair value at the date of acquisition. Any...

  • Page 79
    ... the purposes of meeting short term cash commitments rather than investment purposes. Bank deposits are recorded at amounts to be received. Negotiable certificates of deposit and bills of exchange are classified as "available-for-sale" financial assets and are held at fair value. The carrying amount...

  • Page 80
    ... corporations are classified as "available-for-sale" financial assets and are measured at fair value at each reporting date. Fair values are calculated on the following basis: • for listed securities traded in an organised financial market, we use the current quoted market bid price at reporting...

  • Page 81
    ... part of our ubiquitous telecommunications network work together to generate net cash inflows. No one item of telecommunications equipment is of any value without the other assets to which it is connected in order to achieve the delivery of products and services. As a result, we have determined that...

  • Page 82
    .... The net effect of the reassessment of service lives for financial year 2013 was a decrease in our depreciation expense of $224 million (2012: $248 million) for the Telstra Group. Our major repairs and maintenance expenses relate to maintaining our exchange equipment and the customer access network...

  • Page 83
    ... assets are reviewed each year. Any reassessment of service lives in a particular year will affect the amortisation expense through to the end of the reassessed useful life for both that current year and future years. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 84
    ... employee benefits at their nominal amounts. These are calculated based on remuneration rates expected to be current at the date of settlement and include related on costs. Certain employees who have been employed by Telstra for at least 10 years are entitled to long service leave of three months...

  • Page 85
    ... buy-back, net of tax, are also deducted from contributed equity. We also record the purchase of Telstra Entity shares by our employee share plan trusts as a reduction in share capital. Share based remuneration associated with our employee share plans is recognised as additional share capital. Non...

  • Page 86
    ...or principal. Indicators which support that we are the principal include: • Telstra is primarily responsible for the fulfilment of the customer order; • Telstra has risks of ownership of the product or delivery of the services; • Telstra is involved in price setting; • Telstra is involved in...

  • Page 87
    ...at amortised cost, and the actual proceeds received. The benefit is accounted for in accordance with our accounting policy for government grants described above. 2.18 Taxation (a) Income taxes FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS...

  • Page 88
    ... is used to determine the value of the plan assets at reporting date and is calculated by reference to the net market values of the plan assets. Defined benefit obligations are based on the expected future payments required to settle the obligations arising from current and past employee services...

  • Page 89
    ... reporting period. Refer to note 24 for details on the key estimates used in the calculation of our defined benefit liabilities and assets. 2.21 Employee Share Plans We own 100 per cent of the equity of Telstra ESOP Trustee Pty Ltd, the corporate trustee for the Telstra Employee Share Ownership Plan...

  • Page 90
    ... at fair value and the borrowings are accounted for on an amortised cost basis consistent with a revised effective interest rate as at the de-designation date. The gains or losses on both the borrowings and derivatives are included within finance costs on the basis that the net result primarily...

  • Page 91
    ... Telstra Group in future reporting periods are detailed below. Apart from these standards, we have considered other accounting standards that will be applicable in future periods but which are considered insignificant to Telstra. FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES...

  • Page 92
    ...AASB in August 2011 and replaces the current AASB 128 standard. Limited amendments have been made to AASB 128, including the application of AASB 5: "Non current assets held for sale and discontinued operations" to interests in associates and joint ventures and how to account for changes in interests...

  • Page 93
    ... on Telstra's financial statements, specifically in the following areas: • the defined benefit expense will no longer contain the expected return on planned assets; instead this will be replaced by net interest income or expense, calculated using a discount rate (based on government bonds) applied...

  • Page 94
    ... in future reporting periods (continued) (k) Other (continued) • AASB 2012-3: "Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities"; • AASB 2012-5: "Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle...

  • Page 95
    ... under TESOP99 (for financial year 2012 only). Refer to note 27 for details regarding equity instruments issued under the Growthshare and TESOP share plans...12,443 (37) 12,406 38 12,444 12,443 (45) 12,398 8 12,406 Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 93

  • Page 96
    ... share Previous year final dividend paid ...Interim dividend paid ...Total dividends paid ...Dividends paid are fully franked at a tax rate of 30%. Dividends per share in respect of each financial year are detailed below. Telstra Entity Year ended 30 June 2013 2012 cents cents Dividends per ordinary...

  • Page 97
    ... CSL New World Mobility Limited, our 76.4 per cent owned subsidiary in Hong Kong, responsible for providing full mobile services including handset and device sales, mobile voice, and mobile data products to the Hong Kong market; • Telstra China, our mainland China business providing digital media...

  • Page 98
    ..., Products and Marketing (TIPM); • Telstra Customer Sales and Services head office function, reporting to the Chief Customer Officer (excluding the domestic retail business units of TC, TB and TE&G); • Telstra Health; • Telstra Ventures Group; • TelstraClear; and • our corporate areas...

  • Page 99
    ... tables detail our segment results based on the reporting structure as at 30 June 2013: Telstra Group Year ended 30 June 2013 Revenue from external customers (ii) . . Other income ...Total income ...Labour expenses ...Goods and services purchased (ii) . Other expenses ...Share of equity accounted...

  • Page 100
    ... TO THE FINANCIAL STATEMENTS (CONTINUED) 5. SEGMENT INFORMATION (CONTINUED) Segment results (continued) A reconciliation of EBITDA contribution for reportable segments to Telstra Group's EBITDA, EBIT and profit before income tax expense is provided below: Telstra Group Year ended 30 June 2013 2012...

  • Page 101
    ... results (continued) FINANCIAL STATEMENTS Note Telstra Group Year ended 30 June 2013 2012 $m $m Income from our products and services Fixed ...Mobile ...Data and IP...Network applications and services ...Media ...International businesses ...TelstraClear...Other sales revenue (v) ...Other revenue...

  • Page 102
    ...) under the Retraining Fund Deed NBN Definitive Agreement. The grant, received last year, is being used to retrain certain employees over a period of eight to ten years; and • $11 million (2012: $6 million) related to other contracts accounted for as government grants. There are no unfulfilled...

  • Page 103
    NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 7. EXPENSES FINANCIAL STATEMENTS Note Telstra Group Year ended 30 June 2013 2012 $m $m Labour Included in our labour expenses are the following Employee redundancy ...Share based payments...Defined benefit plan expense ...24 Cost of goods sold ......

  • Page 104
    ... relationships based on contractual face value amounts and cash flows over the life of the transaction. (f) Interest on borrowings has been capitalised using a capitalisation rate of 6.4 per cent (2012: 7.0 per cent). 102 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 105
    NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 8. REMUNERATION OF AUDITORS FINANCIAL STATEMENTS Telstra Group Year ended 30 June 2013 2012 $m $m Audit fees EY has charged the following amounts for auditing and reviewing the financial reports ...Other services Audit related (a) ...Non-audit services...

  • Page 106
    ... income or equity during the year ... Telstra Group As at 30 June 2013 2012 $m $m (Deferred tax liability)/deferred tax asset Deferred tax items recognised in the income statement (*) Property, plant and equipment ...Intangible assets ...Borrowings and derivative financial instruments ...Provision...

  • Page 107
    ... payable by the Telstra Entity of $247 million (2012: $211 million) under the tax funding arrangements are due in the next financial year upon final settlement of the current tax payable for the tax consolidated group. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 108
    ... - 30 days . . Past due 31 - 60 days . Past due 61 - 90 days . Past due 91 - 120 days. Past 120 days ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 106 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 109
    ...Non current finance lease receivables 66 148 214 51 91 142 The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average effective interest rate contracted is 7.7 per cent (2012: 7.8 per cent) per annum. Telstra Corporation Limited and controlled...

  • Page 110
    ...goods recorded at net realisable value ... 27 27 24 24 (a) Construction contract disclosures are shown as follows Contract costs incurred and recognised profits ...Progress billings ... 592 (512) 80 479 (432) 47 108 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 111
    ...cent shareholding in TelstraClear Limited and its controlled entity (TelstraClear). The disposal was subsequently completed on 31 October 2012 following regulatory approval. Refer to Note 20 for further details. In accordance with AASB 5: "Non current Assets Held for Sale and Discontinued Operations...

  • Page 112
    NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 13. PROPERTY, PLANT AND EQUIPMENT Telstra Group As at 30 June 2013 2012 $m $m Land and site improvements At cost ...Buildings (including leasehold improvements) At cost ...Accumulated depreciation and impairment... 52 38 1,166 (586) 580 1,077 (536) ...

  • Page 113
    ... net result of refinancing a property under a finance lease owned by Telstra Europe Limited, during financial year 2013. Refer to note 22 for further details. Work in progress As at 30 June 2013, the Telstra Group has property, plant and equipment under construction amounting to $637 million (2012...

  • Page 114
    NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 14. INTANGIBLE ASSETS Telstra Group As at 30 June 2013 2012 $m $m Goodwill At cost ...Accumulated impairment ... 1,650 (268) 1,382 1,554 (265) 1,289 Internally generated intangible assets Software assets developed for internal use (a) ...Accumulated ...

  • Page 115
    ... down value at 30 June 2012 ...- additions ...- acquisition through business combinations . . - impairment losses (f) ...- amortisation expense ...- net foreign currency exchange differences . . - other ...Written down value at 30 June 2013 ... FINANCIAL STATEMENTS Telstra Annual Report 2013 113

  • Page 116
    ..., respectively for the TelstraClear, LMobile Group and CitySearch CGUs. (g) As at 30 June 2012, assets and liabilities of TelstraClear Limited were classified as held for sale. Refer to note 12 for further details. 114 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 117
    ... non interest bearing liabilities. We generally process trade creditor payments once they have reached 30 days for electronic funds transfer payments, or 30 days from the end of the month of invoice for other payments. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 118
    ... this amount (refer to note 2.14 for further details). Telstra Group As at 30 June 2013 2012 Weighted average projected increase in salaries, wages and associated on-costs ...Discount rates ...4.7% 4.2% 4.7% 3.6% 116 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 119
    ...other than employee benefits FINANCIAL STATEMENTS Telstra Group Year ended 30 June 2013 2012 $m $m Workers' compensation (i) Opening balance ...- additional provisions ...- amount used ...- unwinding of discount on liabilities recognised at present value - effect of any change in the discount rate...

  • Page 120
    ..., return capital to shareholders or issue new shares. During financial year 2013, we paid dividends of $3,480 million (2012: $3,475 million). Refer to note 4 for further details. Non current Long term debt Offshore loans (i) ...Telstra bonds and domestic loans (ii) . Finance leases ...22 Agreement...

  • Page 121
    ... foreign exchange risk associated with our offshore investments. Refer to Table D for the net contractual face values of our borrowings on a post hedge basis. Refer to Table E for details on debt issuance and maturities. FINANCIAL STATEMENTS (ii) Telstra bonds and domestic loans Telstra bonds...

  • Page 122
    ... to approximate fair value. (ii) These borrowings are in fair value hedges. The carrying amount of our borrowings in fair value hedges is adjusted for fair value movements attributable to the hedged risk. 120 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 123
    ... currency amounts are reported in Australian dollars based on the applicable exchange rate as at 30 June. Total net debt in Table D agrees to the face value of our financial instruments included in net debt in Table C. The face values differ from the statement of financial position carrying amounts...

  • Page 124
    ... swap proceeds on new borrowings, which will be amortised to interest in the income statement over the life of the borrowing; and a loss of $18 million (2012: $15 million) comprising the amortisation of discounts. 122 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 125
    ... principally from a reduction in short-term market base interest rates in the current year compared with the prior year, resulting in lower costs on the floating rate debt component of our debt portfolio. ... ... Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 123

  • Page 126
    ... non financial asset (for example property, plant and equipment) the gain or loss in the cash flow hedging reserve will be transferred and included in the measurement of the initial cost of the asset at the date on which the asset is recognised. 124 Telstra Annual Report 2013 Telstra Corporation...

  • Page 127
    ... used to estimate the fair value. Table I Telstra Group As at 30 June 2013 Level 1 Level 2 Level 3 $m $m $m Available for sale investments - other Unlisted securities . . Derivative assets Cross currency swaps Interest rate swaps . . Forward contracts . . Table J FINANCIAL STATEMENTS Telstra Group...

  • Page 128
    ... by reference to forward exchange market rates at reporting date for contracts with similar maturity profiles. These market rates are observable and therefore these derivatives have been classified as Level 2. 126 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 129
    ... exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non derivative financial instruments, and the investment of excess liquidity. We enter into derivative transactions in accordance with Board approved policies to manage our exposure to market risks and...

  • Page 130
    ... in the following table represent Australian dollar interest positions. Principal/notional amounts shown are net of discounts and therefore differ from the face value disclosed in note 17 (Tables C and D). 128 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 131
    .../notional value) effective interest rate, as at reporting date. (^) Rates on cash and cash equivalents represent average rates earned on net positive cash balances after taking into account bank set-off arrangements. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 132
    ... net foreign investments. (**) Financial instruments used to hedge a loan from wholly owned controlled entity. (ii) Sensitivity analysis - interest rate risk The sensitivity analysis included in this section is based on the interest rate risk exposures on our net debt portfolio as at reporting date...

  • Page 133
    ... account all underlying exposures and related hedges, profit and equity after tax would have been affected as follows. Table B FINANCIAL STATEMENTS Telstra Group +10% Net profit or loss Equity (cash flow (*) hedging reserve) Year ended 30 June As at 30 June Gain/(loss) Gain/(loss) 2013 2012 2013...

  • Page 134
    ... and our offshore investments mainly in Hong Kong dollars, British pounds sterling and Chinese renminbi (relating to our investments in Hong Kong CSL Limited, Telstra Limited, Autohome Inc. and Sequel Media Inc.). 132 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 135
    ...against all applicable currencies as illustrated in Table C, with all other variables held constant and taking into account identified underlying exposures and related hedges, net profit or loss and equity after tax would have been affected as follows. Table C FINANCIAL STATEMENTS Telstra Group 10...

  • Page 136
    ...-for-sale financial assets, finance lease receivables and derivative financial instruments. To help manage this risk: • we have a policy for performing credit risk assessments on new and existing customers and, where required, establishing credit limits and payment terms for entities we deal with...

  • Page 137
    ... to the current market pricing for interest rates over the period to maturity. Also affecting liquidity are cash and cash equivalents, available for sale financial assets and other interest and non-interest bearing financial assets. Liquidity risk associated with these financial instruments is...

  • Page 138
    ... which net cash flows are exchanged. Classification into net receive and net pay positions is based on the total net cash flows over the life of the contract. (ii) Contractual amounts to be exchanged representing gross cash flows to be exchanged. Telstra Corporation Limited and controlled entities

  • Page 139
    ... to changes in market interest rates relating to an Australian dollar private placement bond; and • some forward foreign currency contracts that are not in a designated hedge relationship for hedge accounting purposes, used to economically hedge fair value movements for changes in foreign exchange...

  • Page 140
    ... where those gains or losses relate to the hedged risks largely represents ineffectiveness attributable to movements in Telstra's borrowing margins. The remeasurement of the hedged items resulted in a loss before tax of $599 million (2012: loss of $208 million) and the changes in the fair value of...

  • Page 141
    ...flows reported in Australian dollars based on the applicable exchange rate as at 30 June and represent the identified foreign currency exposures at reporting date in relation to our cash flow hedges. Table G Telstra Group Nominal cash outflows As at 30 June 2013 2012 $m $m FINANCIAL STATEMENTS The...

  • Page 142
    140 18. FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Hedge relationships (continued) Telstra Group - 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Telstra Annual Report 2013 Table H Face value Final currency and interest positions Notional/face value Pre hedge underlying exposure ...

  • Page 143
    ... dollar ...Domestic loans - floating Australian dollar ...Net foreign investments Hong Kong dollar ...Loans from wholly owned controlled entities New Zealand dollar ...300 (228) (12,303) (163) (5,678) (50) 8,332 FINANCIAL STATEMENTS (300) (228) (6,950) (5,841) Telstra Annual Report 2013 141

  • Page 144
    ... - non interest bearing Japanese yen - contractual maturity 1 month (2012: nil)...United states dollars - contractual maturity 0-12 months (2012: 0-12 months) ... Telstra Group Derivative hedging instruments - forward foreign currency contracts Average exchange Notional value rate 2013 2012 (150...

  • Page 145
    ... face value in Australian dollars of promissory notes hedging net foreign investments was nil (2012: $277 million). We disposed of our investment in TelstraClear on 31 October 2012. Refer to note 20 for further details. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013...

  • Page 146
    ... under employee share plans The net services received under the employee share plans account is used to record the cumulative value of our options, performance rights, restricted shares, incentive shares, Directshare and Ownshare issued under Growthshare. Contributions by Telstra Corporation Limited...

  • Page 147
    ... FOXTEL Partnership ...Share based payments...Defined benefit plan expense ...Net gain on disposal of property, plant and equipment...Net gain on disposal of intangibles ...Net gain on de-recognition of finance leases ...Net loss on disposal of controlled entities ...Net loss on sale of businesses...

  • Page 148
    ... 2012, our controlled entity Telstra New Zealand Holdings Limited sold its 100 per cent shareholding in TelstraClear Limited and its controlled entity (TelstraClear). The effect of the disposal is detailed below: TelstraClear Year ended 30 June 2013 $m 680 (11) 669 146 Telstra Annual Report 2013...

  • Page 149
    ... in applicable foreign exchange rates during the period. (a) During financial year 2013, Sensis Group acquired Australian Local Search Pty Ltd (TrueLocal) which resulted in additional goodwill allocated to Sensis Group CGU. Refer to note 20 for further details. (b) During financial year 2012, the...

  • Page 150
    ... fibre links, exchange rack spaces and ducts; and - the sale of lead-in-conduits. Given this, the results of our impairment testing for the networks show that the carrying amounts are recoverable at 30 June 2013. 148 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 151
    ... with total minimum lease payments of $15 million (2012: $16 million) for the Telstra Group. Our property operating leases generally contain escalation clauses, which are fixed increases generally between 3 per cent and 5 per cent, or increases subject to the consumer price index or market rate. We...

  • Page 152
    ... other related equipment as part of the solutions management and outsourcing services that we provide to our customers. Refer to note 10 for further details regarding these finance subleases. During financial year 2013, we acquired the head leases associated with a property in Telstra Europe Limited...

  • Page 153
    ... in relation to agreements entered into as part of the partnership where we were liable if our partner in this relationship failed to meet any of its obligations (2012: $96 million). FINANCIAL STATEMENTS Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 151

  • Page 154
    ... are based on the employees' remuneration and length of service. Measurement dates For Telstra Super, actual membership data as at 30 April was used to value the defined obligations as at that date. Details of assets, benefit payments and other cash flows as at 31 May were also used in relation to...

  • Page 155
    ... periods is determined as follows: FINANCIAL STATEMENTS 2013 $m Fair value of defined benefit plan assets (b) ...Present value of the defined benefit obligation (c) ...Net defined benefit liability before adjustment for contributions tax Adjustment for contributions tax ...Net defined benefit...

  • Page 156
    .... For financial year 2014, we expect to pay total benefit payments of $243 million (including benefits retained) to defined benefit members of Telstra Super. (d) Amounts recognised in the income statement and in other comprehensive income Telstra Group Year ended 30 June 2013 2012 $m $m ...3,266...

  • Page 157
    ... and shares in, Telstra Corporation Limited. Refer to note 29 for further details. (f) Principal actuarial assumptions We used the following major annual assumptions to determine our defined benefit plan expense for the year ended 30 June: Telstra Super Year ended 30 June 2013 2012 % % Discount rate...

  • Page 158
    ... using a discount rate based on government guaranteed securities with similar due dates to these expected cash flows. For Telstra Super we have used a blended 10-year Australian government bond rate as it has the closest term from the Australian bond market to match the term of the defined benefit...

  • Page 159
    ...International (Aus) Ltd (a) ...Telstra Pay TV Pty Ltd (a) ...Chief Entertainment Pty Ltd ...Telstra 3G Spectrum Holdings Pty Ltd ...Telstra OnAir Holdings Pty Ltd ...Telstra Business Systems Pty Ltd (a) ...Telstra Plus Pty Ltd ...Telstra Ventures Pty Ltd (formerly Applications and Ventures Group Pty...

  • Page 160
    ...Holdings Limited (c) ...• Reach Network India Private Limited (c) ...• Reach Data Services India Private Limited (c) . . • Beijing Australia Telecommunications Technical Consulting Services Company Limited (c)...• Telstra Holdings (Bermuda) No. 2 Limited ...• CSL New World Mobility Limited...

  • Page 161
    ... Limited (h)(i) ...• CLEAR Communications Limited (h)(i) . • Telstra Telecommunications Private Ltd (c) . . Network Design and Construction Limited (a) ...• NDC Global Holdings Pty Limited ...• NDC Global Services Pty Limited ...Telstra Services Solutions Holdings Limited (a) . . Sensis Pty...

  • Page 162
    ... Corporation Limited; Telstra Multimedia Pty Ltd; Telstra International (Aus) Ltd; Telstra Pay TV Pty Ltd; Telstra Ventures Pty Ltd; Telstra iVision Pty Ltd; Telstra Communications Limited; Telstra Holdings Pty Ltd; Network Design and Construction Limited; Telstra Services Solutions Holdings Limited...

  • Page 163
    ... to the Class Order as follows. This excludes Telstra Finance Limited. All significant transactions between members of the closed group have been eliminated. Closed group statement of financial position FINANCIAL STATEMENTS Closed group As at 30 June 2013 2012 $m $m Current assets Cash and cash...

  • Page 164
    ... costs...Net finance costs ...Profit before income tax expense ...Income tax expense ...Profit for the year available to the closed group ...Items that will not be reclassified subsequently to the closed group income statement Retained profits: ...- actuarial gain/(loss) on defined benefit plans...

  • Page 165
    ... consolidated the financial results, position and cash flows of these entities into our Telstra Group financial report. We have no direct equity interest in the following entities within the Octave Investments Holdings Limited Group Beijing Xunjie Yingxiang Network Technology Company Ltd; Beijing...

  • Page 166
    ...entities changed their names during financial year 2013: • Application and Ventures Group Pty Ltd changed its name to Telstra Ventures Pty Ltd; and • Reach Web Holdings Inc. changed its name to Telstra Web Holdings Inc. 164 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 167
    ... Limited (c)(d)(h) IP Health Pty Ltd (d)(h) Pay television Pay television Customer service Management services Pay television International connectivity services Toll free number portability in New Zealand Management of former 3GIS Partnership 3G network services Regional roaming provider Online...

  • Page 168
    ... our reporting date of 30 June for financial year 2013 Reach Ltd - 31 December; 3GIS Pty Ltd - 31 December; Bridge Mobile Pte Ltd - 31 March; and Australia-Japan Cable Holdings Limited - 31 December. Financial reports prepared as at 30 June are used for equity accounting purposes. Our ownership...

  • Page 169
    ... costs and digital set top box units. On 31 August 2012, we concluded our 3GIS Partnership with Vodafone Hutchison Australia. Our property lease commitments have continued as both parties have been assigned their share of leases. 2 3 5 5 10 2 2 2 9 Associated entities Telstra Group Year ended/As...

  • Page 170
    ...where equity accounting has been suspended): Total income ...Total expenses ...Profit before income tax expense Income tax expense ...Profit for the year ...2,941 2,795 146 14 132 2,953 2,868 85 2 83 32 23 9 1 8 25 14 11 11 168 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 171
    ... equity accounted carrying amount, is shown below: FINANCIAL STATEMENTS 26. INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES (CONTINUED) Period 2013 $m Jointly controlled entities FOXTEL (*) ...Reach Ltd ...Associated entities Australia-Japan Cable Holdings Limited ... Telstra Group Year...

  • Page 172
    ... from the date of effective allocation; • when the minimum level of executive shareholding has been achieved and the Board approves removal of the five year restriction period; • upon the ceasing of employment by the executive; or 170 Telstra Annual Report 2013 Telstra Corporation Limited and...

  • Page 173
    ...on the market value of Telstra shares on grant date. (#) The number outstanding includes incentives shares and deferred shares that are subject to a restriction period. These amount to 4,048,652 as at 30 June 2013. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 171

  • Page 174
    ... 27. EMPLOYEE SHARE PLANS (CONTINUED) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans The purpose of LTI plans is to align key executives' rewards with shareholders' interests, and reward performance improvement whilst supporting business plans and corporate strategies. The...

  • Page 175
    ... arrangement has been provided in financial year 2013, which is a restricted share plan where the number of restricted shares allocated is based on the same performance measures as his financial year 2012 STI plan. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 173

  • Page 176
    ... employee or executive. A description of each type of option that existed in financial year 2013 is set out below: Executive LTI options • relative total shareholder return options (RTSR options) - the performance hurdle for these options is based on growth in For financial years 2013, 2012, 2011...

  • Page 177
    ... employee share rights plan for financial years 2011 and 2010, certain eligible employees were provided performance rights that vest upon completing certain employment requirements. If an eligible employee continues to be employed by an entity that forms part of the Telstra Group three years after...

  • Page 178
    ... financial year 2013 and 2012 ESP, certain eligible employees were provided restricted shares. There are no performance hurdles for these restricted shares. Restricted shares Details of the relevant performance hurdles in relation to restricted shares are set out below: 176 Telstra Annual Report...

  • Page 179
    ... FINANCIAL STATEMENTS (CONTINUED) . FINANCIAL STATEMENTS 27. EMPLOYEE SHARE PLANS (CONTINUED) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (iv) Summary of movements and other information Number of equity instruments Outstanding at 30 June 2012 Growthshare...

  • Page 180
    ... at 30 June 2012 are those performance rights that satisfied the RG and NT performance hurdles for the final performance period. The Growthshare 2006 plan reached its final testing point as at 30 June 2010. 178 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 181
    ... 2010 allocation of performance rights, and $4.41 for financial year 2012 and 2013 allocation of ESP restricted shares respectively. These share prices were based on the closing market price on the exercise dates. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 179

  • Page 182
    ... the service is received which commenced 1 July 2012. The fair value of financial year 2013 GMD Telstra Wholesale restricted shares is $3.82 and is based on the market value of Telstra shares at the allocation date of 17 August 2012. 180 Telstra Annual Report 2013 Telstra Corporation Limited and...

  • Page 183
    ... from August 2012 as it is no longer in use. Under the Directshare plan, non-executive Directors could nominate to receive a percentage of their total remuneration package as Telstra shares (allocated to participating Directors at market price). As a result of its cancellation, no new grants may be...

  • Page 184
    ... Trust relating to these instruments are transferred to the participants at the completion of the restriction period (unless an Ownshare participant directs the trustee to sell the Ownshares on the participant's behalf). 182 Telstra Annual Report 2013 Telstra Corporation Limited and controlled...

  • Page 185
    ...of cessation of employment vest. TESOP99 and TESOP97 As part of the Commonwealth's sale of its shareholding in financial years 2000 and 1998, Telstra offered eligible employees the opportunity to buy ordinary shares of Telstra. These share plans were: • the Telstra Employee Share Ownership Plan II...

  • Page 186
    ... June 2011...Exercised (#) ...Equity instruments outstanding and exercisable as at 30 June 2012 ...Exercised (#) ...Sold (^) ...Equity instruments outstanding and exercisable as at 30 June 2013 ...(*) The fair value of these shares is based on the market value of Telstra shares at reporting date and...

  • Page 187
    ... Director non-executive Director Position FINANCIAL STATEMENTS Chief Customer Officer, Group Managing Director, Telstra Customer Sales and Service Group Managing Director, Telstra Media Group Managing Director, Telstra Wholesale Group Managing Director, Telstra Innovation Products and Marketing...

  • Page 188
    ... compensation During financial years 2013 and 2012, the aggregate compensation provided to our KMP was as follows. Telstra Group As at 30 June 2013 2012 $ $ Short term employee benefits Post employment benefits . . Other long term benefits ...Termination benefits ...Share-based payments...23,215...

  • Page 189
    ... in shares of the Telstra Entity During financial year 2013, our KMP and their related parties held share capital of the Telstra Entity directly, indirectly or beneficially as follows: FINANCIAL STATEMENTS Total shares held at 30 June 2012 Number Non-Executive Directors Catherine B Livingstone...

  • Page 190
    ... Total shareholdings include shares held by our KMP and their related parties. Unless related to our employee share plans, shares acquired or disposed by our KMP during financial year 2012 were on an arm's length basis at market price. (a) For those non-executive Directors and senior executives who...

  • Page 191
    ... vested equity instrument is convertible into one ordinary share. (a) For those senior executives who qualified as KMP during the year, represents equity instruments held as at the date on which they became KMP. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 189

  • Page 192
    ... into one ordinary share. (a) For those senior executives who qualified as KMP during the year, represents equity instruments held as at the date on which they became KMP. (b) During financial year 2012, other changes for our performance rights and options are a result of instruments expiring...

  • Page 193
    ... connectivity and management services to Telstra International Limited amounting to $221 million (2012: $136 million). (b) During financial year 2013, the Telstra Entity recorded dividend revenue mainly from the following entities: • $518 million (2012: $64 million) from Telstra Holdings Pty...

  • Page 194
    ... recorded in the income statement and statement of financial position are as follows. Telstra Group Year ended/As at 30 June 2013 2012 $m $m Income from jointly controlled and associated entities Sale of goods and services (i) ...Distribution from FOXTEL Partnership (j) ...Interest on loans to...

  • Page 195
    ... employment benefits FINANCIAL STATEMENTS Transactions involving other related entities As at 30 June 2013, the Telstra Superannuation Scheme (Telstra Super) owned 40,152,463 shares in Telstra Corporation Limited (2012: 38,383,958) at a cost of $136 million (2012: $118 million) and a market value...

  • Page 196
    ... INFORMATION Telstra Entity As at 30 June 2013 2012 $m $m Statement of financial position Total current assets...Total non current assets (a) ...Total assets ...Total current liabilities ...Total non current liabilities ...Total liabilities ...Share capital ...Cashflow hedging reserve ...General...

  • Page 197
    ...of third parties under defeasance arrangements, whereby lease payments were made on our behalf by the third parties over the terms of the finance leases, expired during the year (2012: $96 million (US$98 million)). Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 195

  • Page 198
    ... than: Final Dividend On 8 August 2013, the Directors of Telstra Corporation Limited resolved to pay a fully franked final dividend of 14 cents per ordinary share. The record date for the final dividend will be 23 August 2013, with payment being made on 20 September 2013. Shares will trade excluding...

  • Page 199
    ... Deed of Cross Guarantee described in note 25(a). For and on behalf of the board Catherine B Livingstone AO Chairman David I Thodey Chief Executive Officer and Executive Director 8 August 2013 Sydney, Australia Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 197

  • Page 200
    ... report of Telstra Corporation Limited is in accordance with the Corporations Act 2001, including: i giving a true and fair view of the consolidated entity's financial position as at 30 June 2013 and of its performance for the year ended on that date; and ii complying with Australian Accounting...

  • Page 201
    ...,084 850,320,930 2,304,559,076 7,702,687,701 12,443,074,357 % 3.02% 9.72% 6.83% 18.52% 61.90% 100.00% The number of shareholders holding less than a marketable parcel of shares was 30,050 holding 1,762,108 shares. Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 199

  • Page 202
    ... NEWECONOMY COM AU NOMINEES PTY LIMITED QUESTOR FINANCIAL SERVICES LIMITED NAVIGATOR AUSTRALIA LTD TELSTRA GROWTHSHARE PTY LTD NULIS NOMINEES (AUSTRALIA) LIMITED NETWORK INVESTMENT HOLDINGS PTY LTD EQUITAS NOMINEES PTY LTD MILTON CORPORATION LIMITED DJERRIWARRH INVESTMENTS LTD Number of Shares 1,914...

  • Page 203
    ...-FINANCIAL RESULTS Key performance indicator Employee engagement Score (%) Health and safety Lost Time Injury Frequency Rate (LTIFR) Gender equality Women in executive management (%) Volunteering during Telstra time Total (days) Payroll Giving Participation rate (%) Social and community investment...

  • Page 204
    ...on the basis which we provided guidance to the market. Our guidance assumed wholesale product price stability, no impairments je_dl[ijc[djiWdZ[nYbkZ[iWdofheY[[Ziedj^[iWb[e\Xki_d[ii[i$ REPORTED FY13 $m IWb[ih[l[dk[ Total revenue Total income (excl. finance income) BWXekh =eeZiWdZi[hl_Y...

  • Page 205
    (This page has been left blank intentionally) Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 203

  • Page 206
    (This page has been left blank intentionally) 204 Telstra Annual Report 2013 Telstra Corporation Limited and controlled entities

  • Page 207
    ... Telstra is listed on Stock Exchanges in Australia and in New Zealand (Wellington) WEBSITES Telstra Investor Centre: www.telstra.com.au/investor Telstra's Sustainability home page: www.telstra.com.au/sustainability Indicative Financial Calendar* Final dividend paid Annual General Meeting Half Year...

  • Page 208
    telstra.com.au/investor